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Europe’s New Hope?

The prospect that the centrist, pro-European Emmanuel Macron will be the next French president has fueled hope that renewed Franco-German leadership of the EU may be on the horizon. After Germany's general election in September, however, both countries may have to focus on sorting out Italy's weaknesses and priorities.

BRUSSELS – The prospect that the centrist, pro-European Emmanuel Macron will become the next French president has fueled hope that renewed Franco-German leadership of the European Union may be on the horizon. After Germany’s general election in September, it is hoped, a more stable EU could begin to make much faster progress toward unity and integration.

To that end, reforming the eurozone seems an obvious first step – one that Macron himself brings up often. But this might be more difficult than anticipated. For one thing, there are deep differences between the economic philosophies of policymakers in France and Germany.

As Markus K. Brunnermeier, Harold James, and Jean-Pierre Landau explain, Germany has become the champion of a rules-based system that emphasizes keeping deficits low and generally prohibits bailing out debtors. France, by contrast, tends to support the idea that the state should be free to intervene when needed, running a deficit or even providing a bailout to prevent a crisis. Fortunately, Macron’s program recognizes elements of the German approach, such as the need to balance the budget in the long term, which suggests that, under his leadership, a Franco-German compromise might be possible.

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